SUNK COSTS, DEPRECIATION, AND INDUSTRY DYNAMICS

SUNK COSTS, DEPRECIATION, AND INDUSTRY DYNAMICS

Two of the most robust results from dynamic competitive models of industrial organization suggest that higher-sunk-cost industries should exhibit higher intertemporal variability in the market value of their firms and lower intertemporal variability in the size of their industries. These predictions...

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Veröffentlicht in:The review of economics and statistics 2012-11, Vol.94 (4), p.1059-1065
Hauptverfasser: Gschwandtner, Adelina, Lambson, Val E.
Format: Artikel
Sprache:eng
Schlagworte:
Capital depreciation
Capital expenditures
Competition
Costs
Debt management
Depreciation
Depreciation rates
Dynamic models
Economic value
Empirical research
Experimental methods
Industrial dynamics
Industrial economics
Industrial market
Market conditions
Market theory
Market value
Size of enterprise
Studies
Sunk costs
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Beschreibung
Zusammenfassung:Two of the most robust results from dynamic competitive models of industrial organization suggest that higher-sunk-cost industries should exhibit higher intertemporal variability in the market value of their firms and lower intertemporal variability in the size of their industries. These predictions have done well empirically. This paper argues on theoretical and empirical grounds that depreciation generates countervailing effects.
ISSN:0034-6535
1530-9142
DOI:10.1162/REST_a_00236